High-end real estate market in Montreal hurt by corruption headlines

MONTREAL — Quebec’s corruption-related headlines have had a “dampening effect” on the purchase of high-end real estate in Montreal, Sotheby’s International Realty Canada said Tuesday.

Frequent negative headlines, such as those emerging from the Charbonneau Commission — a provincial inquiry investigating malfeasance in Quebec’s construction industry — have affected consumer confidence towards the purchase of luxury properties, said Ross McCredie, president and CEO of Sotheby’s. Among those lacking in confidence are employees at some the engineering firms named at Charbonneau, who are now reluctant to make purchases. “It’s a question of consumer confidence,” he said. “There are people who work at some large engineering firms who are not as confident as they were a year ago.”

The real estate agency’s fall outlook, published Tuesday, is based on anecdotes relayed by brokers, along with its private and publicly listed sales in Montreal of single family homes worth at least $1 million and condos worth a minimum of $750,000. The outlook, however, doesn’t provide actual sales data.

While Montreal’s high-end condo market softened during the first half of 2013, sales of single family homes “experienced steady growth.” McCredie said about half to 60 per cent of high-end homes in Montreal are purchased by foreign buyers, the highest proportion in the country.

These buyers, largely from Asia and the Middle East, are also targeting properties for investments, including 600-square-foot condos for rent at downtown towers like the sold-out Tour des Canadiens. Some of these buyers have invested in Toronto for years, and are just starting to to purchase multiple condo units now in the Montreal market.

“If you took the international buyer out of the Canadian market, our market would be in a lot of trouble,” he said.